University of Illinois Report Takes the Pulse of Illinois’ Shrinking Middle Class

“Shoring up the middle means making bad jobs better, keeping good jobs good, and supporting the growth of the economy as a whole.” 

As income and wealth inequality have risen in Illinois, there has been renewed concern about the hollowing out of the state’s middle class. A recent study by Robby Habans, PhD of the Project for Middle Class Renewal at the University of Illinois at Urbana-Champaign documents trends affecting middle-class households in Illinois.

Note that this article summarizes notable findings in the report– Taking the Pulse of Illinois’ Middle Class: The Changing Size and Composition of Middle Income Households– but the entire study is informative.

The report finds that the portion of Illinois households falling within the middle income range has dropped from 59% in the 1970s to 49% today. While the low-income portion of has gotten marginally bigger in Illinois, the share of high-income households has increased consistently over time.

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Incomes for the median male worker have fallen in Illinois since 1970. The good news is that the increasing number of female workers has curbed the decline of Illinois’ middle class; as more women have entered the workforce, the earnings gap has closed. The bad news is that the decline in male earnings has meant that many households now require two full-time workers in order to achieve a middle-class lifestyle.

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The report also finds that middle-income households are widely dispersed across the state. Middle-income households tend to be concentrated in small-town areas, in southwest and northwest Chicago neighborhoods, and in inner ring suburbs of Chicago. Conversely, lower-income households and rich households tend to be segregated in community archipelagos. Low-income households are heavily concentrated on the South Side of Chicago, near East St. Louis, and in the southern part of the state.

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The shrinking middle class in Illinois is closely related to a fall in middle-class manufacturing employment and declines in union density. The polarization of jobs from production occupations and other middle-skill opportunities towards high-skilled and low-skilled service sectors in Illinois has been a major factor in the shrinking middle class in the state. Manufacturing, which employed about 30% of all middle-income workers in 1980, now employs about 15%. Similarly, declining unionization across the state has been highly correlated with the drop in middle-income households, as union workers are more likely than nonunion workers to be in the middle class.

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The stated goal of the report is “to spur policy discussion rather than to inform a prescriptive set of recommendations,” such as the 10 potential ways to reduce inequality in Illinois offered by the Illinois Economic Policy Institute.

However, Habans notes that the middle class has not benefited from shifts in public policy. The implication is that high-income households have fared better from policy changes both in Illinois and nationally. Habans presents four types of policy approaches to growing the middle class:

  1. Growing from below through standards, such as a higher minimum wage standard;
  2. Growing from below through programs, such as public education and training programs;
  3. Stabilizing from within through standards, such as work-life and family policies; and
  4. Stabilizing from within through programs, such as infrastructure investments.

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The new study by the Project for Middle Class Renewal at the University of Illinois at Urbana-Champaign provides eye opening data that residents, voters, and elected officials must consider. Going forward, Illinois residents must decide whether they want to live in a state with greater inequality or a state with a strong middle class. Extreme inequality can have negative effects on the economy by reducing consumer spending, polarizing opportunities, stagnating intergenerational mobility, worsening health outcomes, increasing criminal activity, and decreasing overall happiness and satisfaction. High-road solutions are available to generate broad-based prosperity for all.

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